Question
Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Division Osaka Yokohama
Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: |
| Division | |||
| Osaka | Yokohama | ||
Sales | $ | 9,800,000 | $ | 28,000,000 |
Net operating income | $ | 588,000 | $ | 2,240,000 |
Average operating assets | $ | 2,450,000 | $ | 14,000,000 |
Required: | |
1. | For each division, compute the return on investment (ROI) in terms of margin and turnover. |
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2. | Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 14%. Compute the residual income for each division. |
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